PM Davis announces VAT reduction on key items

In a move aimed at easing the financial burden on Bahamian families and supporting essential services, Prime Minister Philip Davis announced during his 2025/2026 Budget Communication that the government will implement a significant reduction in Value-Added Tax (VAT) on a wide range of critical goods, effective September 1, 2025.

The reduced VAT rate of 5 percent will apply to several essential products, including:

Baby diapers

Adult incontinence products such as Depends

Feminine hygiene items

Both prescription and non-prescription medications, including drugs for chronic conditions

Medical and dental supplies such as needles, blood pressure monitors, lancets, dental cements, and other dental fillings

Other medical and therapeutic goods, including cell therapy products

“These measures reflect our commitment to reducing the cost of living and ensuring that Bahamians have greater access to necessary healthcare and hygiene products,” Prime Minister Davis said.

In addition to healthcare-related items, the Davis Administration is also providing relief to religious institutions.

Under amendments to the VAT Act, VAT relief on building materials for churches and other religious organizations will be introduced, recognizing their important role in supporting and uplifting communities.

This relief will be granted in two forms: VAT-exempt imports or a refund system for items purchased locally.

“These changes are part of our broader efforts to promote social well-being and economic inclusivity across The Bahamas,” Prime Minister Davis stated.

The VAT reductions come as part of a broader fiscal strategy to stimulate the economy, lower household expenses, and improve access to essential goods and services.